November Rally Lights Up Stock Market As Speculation Grows Over Potential Fed Rate Cuts: The Week In The Markets

The S&P 500 index, as tracked by the SPDR S&P 500 ETF Trust SPY, capped off November with a 8.9% rise, marking its 18th strongest monthly performance since 1950.

Technology stocks, as closely monitored through the Invesco QQQ Trust QQQ, outpaced broader market gains, with the Nasdaq 100 index escalating by 10.8%, recording its fifth-best monthly result in a decade.

Additionally, bond markets rallied as yields took a notable dip, while metal commodities thrived in the wake of a weakening dollar.

Fueling this broad market rally was a surge in investor optimism, anticipating Federal Reserve interest rate cuts in 2024 in response to cooling inflation. Speculative bets are now leaning towards the Fed commencing its rate-cutting cycle in March 2024, with up to five rate reductions by the end of next year.

Chart Of The Week: Stocks, Bonds Rally In Tandem As Dollar Falters

Fed’s preferred inflation measure slows to 3%, paving the way for rate cuts: The Personal Consumption Expenditure (PCE) price index, known as the Fed's preferred measure of inflation, slowed from 3.4% in September to an annual 3% rate in October, aligning with market expectations. The moderation in inflation further bolstered the prospect of multiple rate cuts in the coming year. 

This month’s top-performing ETFs: Financial markets experienced a significant upswing in November, with both stocks and bonds on the rise. Here's a break down the top-performing exchange-traded funds (ETFs) across various asset classes, including country equities, U.S. equity sectors, thematic equities, bonds, and commodities.

November rally sets treasury bonds on track for best month in 40 years: U.S. government bonds are on track for their best month in nearly 40 years, following a summer and early autumn sell off that saw foreign buyers all but desert the Treasury markets.

VIX at pre-pandemic low: Is Wall Street’s fear gauge mispricing risk of downturn? The VIX index has hit its lowest point since before the pandemic, just as equity markets are trying to regain their 2023 highs.

Fed Chair Powell remains cautious, ‘premature’ to declare victory on inflation: In a conversation with Spelman College President Helene Gayle on Friday, Federal Reserve Chair Jerome Powell underscored that it's "premature" to declare the Fed's efforts as sufficiently restrictive, highlighting a readiness to adjust policies further if needed.

Charlie Munger’s ‘buy and hold’ thesis may seem tame, but it worked for Berkshire Hathaway: "The whole secret of investment is to find places where it is safe and wise not to diversify," were the words of Charlie Munger, who died on Tuesday at the age of 99. This principle stood as one of the central tenets of his approach to investing.

Cybertruck delivery event, Elon Musk highlights Tesla’s ‘best product’: On Thursday, electric vehicle leader Tesla Inc TSLA hosted its Cybertruck delivery event at its Giga Factory in Texas. Tesla has confirmed it has over one million reservations for the electric pickup truck.

Chilling 2024 S&P 500 outlook: Why JPMorgan analysts project nightmare scenario for stocks: JPMorgan painted a rather pessimistic picture for the U.S. stock market in 2024. The biggest U.S. bank is forecasting the S&P 500 to drop to 4,200 points next year, implying an 8% fall from current levels, in what can be described as a nightmare scenario for stocks.

What To Watch In The Week Ahead: The focus will be on Friday’s non-farm payrolls, with economists anticipating a November gain of 170,000 jobs, up from October’s 150,000. Additionally, watch for the University of Michigan Consumer Sentiment report on Friday, along with Job Openings and ISM Services PMI on Tuesday.

Now Read: ‘Bond King’ Bill Gross Nets Millions On Treasury Market Rebound

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